TAKE A WALK

Ok ....I agree with you there are many good reasons to  TAKE A WALK.  Many Floridans are head scratching and weighing their options right now and walking away from Home Sweet Home is one of them .

If you have lost your job and now your VP status has been reduced to shelf stocking at Wally World and your daughter just started her first year in college....That's probably a great reasons  to take a  walk.  You just turned 67, your are upside down $200k and you are facing your third back surgery while your employer has been hiring lots of young guys, maybe it's time to take a walk.

Unfortunately, I am starting to hear of  people devising all kinds of odd and self-serving excuses that take advantage of this mess. They are professional victims just the like the people that show up after every Florida hurricane to benefit from the situation and others misfortune. Or middle-class people that stand in line for hours for free cheese that was intended to feed the hungry.

"THE NATURAL LIGHTING IN THIS HOUSE ISN'T RIGHT AND I CAN'T SELL IT SO I THINK I'LL JUST LET IT GO INTO FORECOLSURE"

I was present  to hear  all about this unfortunate tragedy when a home decorating junkie was discussing her personal housing crisis. It's people like this that will certainly prolong the end to the mess we are all in. How long will all of this last? When will it all end?  I don't know but please cut me a hunk of that free cheese. I'll eat it tonight on my 10 minute break at Wally World.

Here's a good read. Be sure to click on the interactive map.

http://online.wsj.com/article/SB126100260600594531.html#project%3DSTRATEGIC_DEFAULTS_0912%26articleTabs%3Darticle

Pete Marriott and Bill Garrison Professional Sarasota Realtors ® Prudential Palms Realty .

http://www.valuesarasotahomes.com/

WHEN SHOULD I BUY OR SELL ?

I am constantly ask by my clients when will be  the best time to buy  a new home or condo. If you are trading up, losing on your present home or condo can be an advantage since the new  home you will be buying is also being sold at a discount, (IE) The $300,000 home or condo you purchased in 2005 is sold for $150,000 but your new home that sold for $600,000 a few years ago is now available for $300,000. Your $150,000 loss turns into a $300,000 gain.  You gain more on the new Sarasota real estate  you purchase more than you lose on your last home or condo you just sold when trading up. If you purchased you present home before that BOOM then buying now can be a win situation all around.

If you simply need a place to live (IE) just moving to Sarasota, my short answer is I doesn't matter if you need a place to live in the near future and you plan to live in your new home for 10 plus years. " Let's find the best priced homes or condos that meet all of your criteria and in your perfect location. After viewing these homes we'll determine which of these is truly the best deal. Finally, tell me if you love this home "  It's like buying stock in a quality company. It doesn't matter when you buy. It is what you buy and how long are you going to keep it.  If you are in the Sarasota Housing market short term housing RENT! The Sarasota real estate market is priced righ for almost everyone. You can buy Sarasota, Florida waterfront beach condo on Siest Key righ now for under $300,000 or a spacious almost new pool home for under $300,000 in a upscale city, Sarasota, Florida.

Pete Marriott and Bill Garrison Professional Sarasota Realtors ® Prudential Palms Realty . http://www.valuesarasotahomes.com/



Wall STREET JOURNAL SAYS NO ONE IS INTERESTED IN LOWER RATES!

TWO LITTLE WORDS.......APPRASIAL ISSUES

You can't get excited about interest reats if you can't refinance or buy. Real estate could quickly rebound and everyone would refinance if it weren't for two little words " Appraisal Issues" We are all just renting our homes from the lenders until we someday actually pay off the mortgage. When our "rent" declines by 25%, which the rates have fallen that much since their highs in 2008, it would make sense that everyone would jump at the chance to buy and refi now. On a $200,000 mortgage you would save about $2,500 / yr P&I. If you have appraisal issues then you can't refinance and If you are upside down can't sell so you can't buy again.

Fear of Loss ( not ever being able to afford a home if you don't buy now) and ease of access to mortgage money is what fueled our last boom and drove the US economy. The Fed doubling short term interest rates
raising rates 17 rimes in 18 months is what sunk us and started the downward spiral. So here we are today in the winter of 2009, stuck in the mud, 4 years after the 2005 peak. Getting rid of appraisal requirements for rate and term refinances and making mortgage purchase easier for buyers is a step in the right direction.... That's my $000,000.02 Bill Garrison Sarasota, Fl www.ValuesarasotaHomes.Com is full of Bank Owned foreclosures and Short Sale properties for sale in Sarasota and Manatee County, Florida That's my $000,000.02
Pete Marriott and Bill Garrison Professional Sarasota Realtors ® Prudential Palms Realty . http://www.valuesarasotahomes.com/


“Jurassic Park ”

7:39 am December 11, 2009

Bill Garrison , Sarasota Fl wrote:

Why Loan Modifications Are Like “TITANIC” and we need a Life Boat !

So many Americans bought a ticket on the USS TO BIG TO FAIL… MR Greenspan advised us to use adjustable rate mortgages. The White House said every American should buy a home. FNMA allowed borrowers to buy up to 10 investment properties. Moodys and S&P rated all of those junk CDOs as AAA…. and the ship sank….. Now Americans need a life boat…. Were are the life boats? You don’t want to help out American familys because it might impact government agencys? Really sad to see what’s happening to our country … That’s my $000,0000.02 bg
Pete Marriott and Bill Garrison Professional Sarasota Realtors ® Prudential Palms Realty .



1:06 am December 10, 2009

Grrrrrrrrrr........... wrote:

Oh….Jeepers maybe B of A will have to sell one of it’s 17 corp jets….. What’s gonna happen to the P&L’s of those lenders and pension funds when a potential 1,000,000 mortgages go into default and the monthly payments turn into $0.00. Hmmm…Wonder if all of the appliances will vanish and maybe in a few years “home sweet home” will finally get sold at 50% of the could have been save mortgage. Oh and how many people do you know that have kept their home for fourty years? 20 years? 10 ? Death, divorce, job relocation, retirement and a hundred other reasons would keep most modifications lasting only a fraction of that term. Most just want a to keep roof over their heads until this economy shakes out. A discounted mortgage has got to be better than monthly payments tunring to $0,00 and an eventual 50% off sale on what’s left of the property …… It’s almost Christmas and I need my $1,000,000 bonus, Is it in the mail ?



December 9, 2009, 5:24 PM ET Why Loan Modifications Are Like ‘Jurassic Park’

By James R. Hagerty




Everett Collection

Controlling the dinosaurs in “Jurassic Park” proved difficult. As he appeared before the House Financial Services Committee Tuesday to discuss the slow progress of government efforts to force lenders to ease payment terms on home mortgages, Anthony B. Sanders was reminded of the movie “Jurassic Park.”



It might be possible to bring dinosaurs back to life, but does that make it a good idea? Similarly, says Dr. Sanders, a professor of real estate finance at George Mason University, it might be possible to slash interest rates on millions of loans, but that doesn’t mean we should.



What if the government’s Home Affordable Modification Program somehow finally gains traction and manages to reduce interest rates to 2% on millions of loans and extend their terms to 40 years? That would just create fresh problems, Dr. Sanders says.



“Our banking industry, Fannie Mae, Freddie Mac and our Federal Reserve would now be sitting on trillions of dollars of mortgages, many at super-low interest rates and stretched maturities to 40 years,” he writes. Any rise in inflation and interest rates would then slash the value of those mortgages. “When one considers the precarious balance sheets of our lending institutions and our government agencies, we should think very, very carefully about loading up their balance sheets with these mortgages,” he warns, adding:



“Congress and the Administration should bear in mind that it is not just the banks that will suffer, but our pension funds, our own government agencies and the viability of the economy going forward.” Banks would be “stuck with low-interest, long-maturity loans on their books that will prevent them from lending to other borrowers or small businesses for a long, long time.”



The solution, he says, is to encourage financial institutions to sell distressed loans and mortgage securities at big discounts from face value to private investors, who could then restructure the loans on realistic terms related to today’s house prices. Such sales would force banks and other financial institutions to book big losses, but perhaps regulators could allow those losses to be absorbed in stages over five years.



If U.S. financial institutions don’t clean up their balance sheets by shedding dud assets soon, “we will make the Japanese zombie banks look the role model for a healthy financial system,” Dr. Sanders says.



But what about all those borrowers struggling to avoid foreclosure? “The (loan) servicers and financial institutions should be able to modify distressed loans as they see as economically appropriate,” Dr. Sanders says. “After all, these are private market contracts between borrowers and lenders.”



Please follow me for housing news on Twitter at: http://twitter.com/jamesrhagerty

They Just Don't Get It !

Here's a real estate up date that's part of my Wall Street Journal  RSS feed you'll find at the bottom of http://www.valuesarasotahomes.com/  and my reply

By Nick Timiraos


As the Federal Housing Administration begins considering how to pull back from its expanded share of the U.S. mortgage market, the agency could face pressure from some lawmakers and those in the real-estate industry who don’t want the FHA to do anything too dramatic.

Lawmakers from high-cost housing districts, for example, want to ensure that the FHA doesn’t disappear from their neighborhoods. They’ve introduced a bill that would make permanent the higher loan limits that Congress temporarily expanded last year. That allowed the agency to insure loans as large as $729,750 in the nation’s most expensive housing markets, up from a $362,000 national cap. California now accounts for around 13% of FHA-backed loans, up from less than 2% during the housing boom, partly because of the higher limits.

Without the higher county-by-county adjustments, “many areas of the country will not get the benefit of the FHA,” said Rep. Barney Frank, the Massachusetts Democrat who chairs the House Financial Services Committee. “We didn’t think it was fair for California to be frozen out of the program.” Mr. Frank said he thinks limits should be increased to around $800,000.

Shaun Donovan, the secretary of the U.S. Department of Housing and Urban Development, said the agency believes the expanded loan limits should be temporary. The larger loans account for less than 2% of all FHA-backed loans. While default rates are slightly lower than on all FHA-backed loans, the loans have little seasoning, because the FHA only began insuring larger loans last year.

Other lawmakers, meanwhile, want to bring back programs that allowed borrowers to receive FHA-backed loans without making down payments. Congress last year ended widely-used programs that had allowed sellers to fund down payments to borrowers through non-profit charities, and the FHA says that those programs have eroded the net worth of the agency’s reserves by $10.5 billion. At Wednesday’s hearing, Reps. Al Green (D., Texas) and Gary Miller (R., Calif.) pressed for the FHA to find new ways that would let buyers qualify for FHA backed loans without making down payments.

“Let’s develop a program for persons who can pay for a home but who are without the necessary down payment,” said Mr. Green, who said he nonetheless understood why there was “a great deal of consternation” over the seller-funded down payment programs.

FHA borrowers are still able to use gifts from state housing finance agencies or relatives to make down payments. Housing officials are unlikely to support any effort to bring back the seller-funded gift program. “The biggest concern and issue is about having an interested party in the transaction providing a down payment,” said Mr. Donovan. “That has been what has led to the incentives that led the program in the wrong direction.”


1:39 pm December 7, 2009

Bill Garrison wrote:

I certainly agree with Al Green and Gary Miller. Why not lower the down payment requirement to 0% for those who would otherwise qualify for a mortgage. Does a few thousand dollars down payment really make a difference? Maybe someone has a 6 year old medical collection on their credit report due to a health insurance error and that has lowered the borrowers credit score to a 639 instead of the new 640 minimum. Does that really have a Bering on the likelihood of a future foreclosure?

How about 0% down only for those persons buying an existing foreclosure property and lowering the credit score requirement back to 580? I bet that would eat up a lot or those foreclosed homes and condos.

It;s more about cash flow thn it is about downpayment. There are many people than don’t have the DP but do have a great income stream. Let’s use up all of this excess housing inventory and put people in these homes vacant homes before they deteriorate into unusable tear down properties. The whole purpose FHA was created was to help people get into homes that did not qualify for a Fannie or Freddy mortgage. If FHA is going broke then they could recoup some of their losses and resale these properties. Maybe the FED should subsidise the monthly insurance premium giving FHA more income and helping the new home owner afford the new mortgage. A few bucks a month from Uncle Sam is better that letting FHA homes set empty only to be eaten up by termites and rotting away until they are uninhabitable.

I am a Sarasota, Florida Realtor and have seen many nice homes and condos turn into really awful shacks due to neglect. http://www.ValueSarasotaHomes.com/BANKOWNED

It seems like there is took much finger pointing and not enough common sense and an unwillingness to take action. That’s my $000,000.02 Bill Garrison Sarasota, Fl

$8000 TAX CREDIT.....SOON TO GO BYE-BYE !

TOO BAD MORE PEOPLE DIDN'T TAKE ADVANTAGE OF THIS WONDERFUL GIFT.
MY GUESS IS THAT  "CASH FOR CLUNKERS" TOOK MANY YOUNG BUYERS OUT OF THE MARKET..... HERE IS IS A REPRINT FROM  THE NATIONAL ASSOCIATION OF HOME BUILDERS THAT DOES A GREAT JOB EXPLAINING  THE PROGRAM ... I THINK  WE HAVE ABOUT 10 MORE DAYS  FOR MORTGAGE  CLIENTS TO TAKE ACTION....

Who is eligible to claim the tax credit?


First-time home buyers purchasing any kind of home—new or resale—are eligible for the tax credit. To qualify for the tax credit, a home purchase must occur on or after January 1, 2009 and before December 1, 2009. For the purposes of the tax credit, the purchase date is the date when closing occurs and the title to the property transfers to the home owner.





What is the definition of a first-time home buyer?

The law defines "first-time home buyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse.



For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. However, unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.





How is the amount of the tax credit determined?

The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.





Are there any income limits for claiming the tax credit?

Yes. The income limit for single taxpayers is $75,000; the limit is $150,000 for married taxpayers filing a joint return. The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return. The phaseout range for the tax credit program is equal to $20,000. That is, the tax credit amount is reduced to zero for taxpayers with MAGI of more than $95,000 (single) or $170,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.





What is "modified adjusted gross income"?

Modified adjusted gross income or MAGI is defined by the IRS. To find it, a taxpayer must first determine "adjusted gross income" or AGI. AGI is total income for a year minus certain deductions (known as "adjustments" or "above-the-line deductions"), but before itemized deductions from Schedule A or personal exemptions are subtracted. On Forms 1040 and 1040A, AGI is the last number on page 1 and first number on page 2 of the form. For Form 1040-EZ, AGI appears on line 4 (as of 2007). Note that AGI includes all forms of income including wages, salaries, interest income, dividends and capital gains.



To determine modified adjusted gross income (MAGI), add to AGI certain amounts of foreign-earned income. See IRS Form 5405 for more details.





If my modified adjusted gross income (MAGI) is above the limit, do I qualify for any tax credit?

Possibly. It depends on your income. Partial credits of less than $8,000 are available for some taxpayers whose MAGI exceeds the phaseout limits.





Can you give me an example of how the partial tax credit is determined?

Just as an example, assume that a married couple has a modified adjusted gross income of $160,000. The applicable phaseout to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by the phaseout range of $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time home buyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.



Here’s another example: assume that an individual home buyer has a modified adjusted gross income of $88,000. The buyer’s income exceeds $75,000 by $13,000. Dividing $13,000 by the phaseout range of $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.



Please remember that these examples are intended to provide a general idea of how the tax credit might be applied in different circumstances. You should always consult your tax advisor for information relating to your specific circumstances.





How is this home buyer tax credit different from the tax credit that Congress enacted in July of 2008?

The most significant difference is that this tax credit does not have to be repaid. Because it had to be repaid, the previous "credit" was essentially an interest-free loan. This tax incentive is a true tax credit. However, home buyers must use the residence as a principal residence for at least three years or face recapture of the tax credit amount. Certain exceptions apply.





How do I claim the tax credit? Do I need to complete a form or application?

Participating in the tax credit program is easy. You claim the tax credit on your federal income tax return. Specifically, home buyers should complete IRS Form 5405 to determine their tax credit amount, and then claim this amount on line 67 of the 1040 income tax form for 2009 returns (line 69 of the 1040 income tax form for 2008 returns). No other applications or forms are required, and no pre-approval is necessary. However, you will want to be sure that you qualify for the credit under the income limits and first-time home buyer tests. Note that you cannot claim the credit on Form 5405 for an intended purchase for some future date; it must be a completed purchase.





What types of homes will qualify for the tax credit?

Any home that will be used as a principal residence will qualify for the credit. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes) and houseboats. The definition of principal residence is identical to the one used to determine whether you may qualify for the $250,000 / $500,000 capital gain tax exclusion for principal residences.



It is important to note that you cannot purchase a home from your ancestors (parents, grandparents, etc.), your lineal descendants (children, grandchildren, etc.) or your spouse. Please consult with your tax advisor for more information. Also see IRS Form 5405.





I read that the tax credit is "refundable." What does that mean?

The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit.



For example, if a qualified home buyer expected, notwithstanding the tax credit, federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15th. Suppose now that the taxpayer qualified for the $8,000 home buyer tax credit. As a result, the taxpayer would receive a check for $7,000 ($8,000 minus the $1,000 owed).





I purchased a home in early 2009 and have already filed to receive the $7,500 tax credit on my 2008 tax returns. How can I claim the new $8,000 tax credit instead?

Home buyers in this situation may file an amended 2008 tax return with a 1040X form. You should consult with a tax advisor to ensure you file this return properly.





Instead of buying a new home from a home builder, I hired a contractor to construct a home on a lot that I already own. Do I still qualify for the tax credit?

Yes. For the purposes of the home buyer tax credit, a principal residence that is constructed by the home owner is treated by the tax code as having been "purchased" on the date the owner first occupies the house. In this situation, the date of first occupancy must be on or after January 1, 2009 and before December 1, 2009.



In contrast, for newly-constructed homes bought from a home builder, eligibility for the tax credit is determined by the settlement date.





Can I claim the tax credit if I finance the purchase of my home under a mortgage revenue bond (MRB) program?

Yes. The tax credit can be combined with the MRB home buyer program. Note that first-time home buyers who purchased a home in 2008 may not claim the tax credit if they are participating in an MRB program.





I live in the District of Columbia. Can I claim both the Washington, D.C. first-time home buyer credit and this new credit?

No. You can claim only one.





I am not a U.S. citizen. Can I claim the tax credit?

Maybe. Anyone who is not a nonresident alien (as defined by the IRS), who has not owned a principal residence in the previous three years and who meets the income limits test may claim the tax credit for a qualified home purchase. The IRS provides a definition of "nonresident alien" in IRS Publication 519.





Is a tax credit the same as a tax deduction?

No. A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. That means that a taxpayer who owes $8,000 in income taxes and who receives an $8,000 tax credit would owe nothing to the IRS.



A tax deduction is subtracted from the amount of income that is taxed. Using the same example, assume the taxpayer is in the 15 percent tax bracket and owes $8,000 in income taxes. If the taxpayer receives an $8,000 deduction, the taxpayer’s tax liability would be reduced by $1,200 (15 percent of $8,000), or lowered from $8,000 to $6,800.





I bought a home in 2008. Do I qualify for this credit?

No, but if you purchased your first home between April 9, 2008 and January 1, 2009, you may qualify for a different tax credit. Please consult with your tax advisor for more information.

Is there any way for a home buyer to access the money allocable to the credit sooner than waiting to file their 2009 tax return?

Yes. Prospective home buyers who believe they qualify for the tax credit are permitted to reduce their income tax withholding. Reducing tax withholding (up to the amount of the credit) will enable the buyer to accumulate cash by raising his/her take home pay. This money can then be applied to the downpayment.



Buyers should adjust their withholding amount on their W-4 via their employer or through their quarterly estimated tax payment. IRS Publication 919 contains rules and guidelines for income tax withholding. Prospective home buyers should note that if income tax withholding is reduced and the tax credit qualified purchase does not occur, then the individual would be liable for repayment to the IRS of income tax and possible interest charges and penalties.



In addition, rule changes made as part of the economic stimulus legislation allow home buyers to claim the tax credit and participate in a program financed by tax-exempt bonds. As a result, some state housing finance agencies have introduced programs that provide short-term second mortgage loans that may be used to fund a downpayment. Prospective home buyers should check with their state housing finance agency to see if such a program is available in their community. To date, 14 state agencies have announced tax credit assistance programs, and more are expected to follow suit. The National Council of State Housing Agencies (NCSHA) has compiled a list of such programs, which can be found here.

The Secretary of Housing and Urban Development has announced that HUD will allow "monetization" of the tax credit. What does that mean?

It means that HUD will allow buyers using FHA-insured mortgages to apply their anticipated tax credit toward their home purchase immediately rather than waiting until they file their 2009 income taxes to receive a refund. These funds may be used for certain downpayment and closing cost expenses.



Under the guidelines announced by HUD, non-profits and FHA-approved lenders will be allowed to give home buyers short-term loans of up to $8,000.



The guidelines also allow government agencies, such as state housing finance agencies, to facilitate home sales by providing longer term loans secured by second mortgages.



Housing finance agencies and other government entities may also issue tax credit loans, which home buyers may use to satisfy the FHA 3.5 percent downpayment requirement.



In addition, approved FHA lenders will also be able to purchase a home buyer’s anticipated tax credit to pay closing costs and downpayment costs above the 3.5 percent downpayment that is required for FHA-insured homes.



More information about the guidelines is available on the NAHB web site. Read the HUD mortgagee letter (pdf) and an explanation of the FHA Mortgagee Letter on Tax Credit Monetization (pdf). An FAQ about monetization (pdf) is available at the NAHB web site.

If I’m qualified for the tax credit and buy a home in 2009, can I apply the tax credit against my 2008 tax return?

Yes. The law allows taxpayers to choose ("elect") to treat qualified home purchases in 2009 as if the purchase occurred on December 31, 2008. This means that the 2008 income limit (MAGI) applies and the election accelerates when the credit can be claimed (tax filing for 2008 returns instead of for 2009 returns). A benefit of this election is that a home buyer in 2009 will know their 2008 MAGI with certainty, thereby helping the buyer know whether the income limit will reduce their credit amount.



Taxpayers buying a home who wish to claim it on their 2008 tax return, but who have already submitted their 2008 return to the IRS, may file an amended 2008 return claiming the tax credit. You should consult with a tax professional to determine how to arrange this.

For a home purchase in 2009, can I choose whether to treat the purchase as occurring in 2008 or 2009, depending on in which year my credit amount is the largest?

Yes. If the applicable income phaseout would reduce your home buyer tax credit amount in 2009 and a larger credit would be available using the 2008 MAGI amounts, then you can choose the year that yields the largest credit amount.

IDN'T TAKE ADVANTAGE OR THIS WONDERFUL OPPERTUNITY...

Who is eligible to claim the tax credit?


First-time home buyers purchasing any kind of home—new or resale—are eligible for the tax credit. To qualify for the tax credit, a home purchase must occur on or after January 1, 2009 and before December 1, 2009. For the purposes of the tax credit, the purchase date is the date when closing occurs and the title to the property transfers to the home owner.





What is the definition of a first-time home buyer?

The law defines "first-time home buyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse.



For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. However, unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.





How is the amount of the tax credit determined?

The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.





Are there any income limits for claiming the tax credit?

Yes. The income limit for single taxpayers is $75,000; the limit is $150,000 for married taxpayers filing a joint return. The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return. The phaseout range for the tax credit program is equal to $20,000. That is, the tax credit amount is reduced to zero for taxpayers with MAGI of more than $95,000 (single) or $170,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.





What is "modified adjusted gross income"?

Modified adjusted gross income or MAGI is defined by the IRS. To find it, a taxpayer must first determine "adjusted gross income" or AGI. AGI is total income for a year minus certain deductions (known as "adjustments" or "above-the-line deductions"), but before itemized deductions from Schedule A or personal exemptions are subtracted. On Forms 1040 and 1040A, AGI is the last number on page 1 and first number on page 2 of the form. For Form 1040-EZ, AGI appears on line 4 (as of 2007). Note that AGI includes all forms of income including wages, salaries, interest income, dividends and capital gains.



To determine modified adjusted gross income (MAGI), add to AGI certain amounts of foreign-earned income. See IRS Form 5405 for more details.





If my modified adjusted gross income (MAGI) is above the limit, do I qualify for any tax credit?

Possibly. It depends on your income. Partial credits of less than $8,000 are available for some taxpayers whose MAGI exceeds the phaseout limits.





Can you give me an example of how the partial tax credit is determined?

Just as an example, assume that a married couple has a modified adjusted gross income of $160,000. The applicable phaseout to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by the phaseout range of $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time home buyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.



Here’s another example: assume that an individual home buyer has a modified adjusted gross income of $88,000. The buyer’s income exceeds $75,000 by $13,000. Dividing $13,000 by the phaseout range of $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.



Please remember that these examples are intended to provide a general idea of how the tax credit might be applied in different circumstances. You should always consult your tax advisor for information relating to your specific circumstances.





How is this home buyer tax credit different from the tax credit that Congress enacted in July of 2008?

The most significant difference is that this tax credit does not have to be repaid. Because it had to be repaid, the previous "credit" was essentially an interest-free loan. This tax incentive is a true tax credit. However, home buyers must use the residence as a principal residence for at least three years or face recapture of the tax credit amount. Certain exceptions apply.





How do I claim the tax credit? Do I need to complete a form or application?

Participating in the tax credit program is easy. You claim the tax credit on your federal income tax return. Specifically, home buyers should complete IRS Form 5405 to determine their tax credit amount, and then claim this amount on line 67 of the 1040 income tax form for 2009 returns (line 69 of the 1040 income tax form for 2008 returns). No other applications or forms are required, and no pre-approval is necessary. However, you will want to be sure that you qualify for the credit under the income limits and first-time home buyer tests. Note that you cannot claim the credit on Form 5405 for an intended purchase for some future date; it must be a completed purchase.





What types of homes will qualify for the tax credit?

Any home that will be used as a principal residence will qualify for the credit. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes) and houseboats. The definition of principal residence is identical to the one used to determine whether you may qualify for the $250,000 / $500,000 capital gain tax exclusion for principal residences.



It is important to note that you cannot purchase a home from your ancestors (parents, grandparents, etc.), your lineal descendants (children, grandchildren, etc.) or your spouse. Please consult with your tax advisor for more information. Also see IRS Form 5405.





I read that the tax credit is "refundable." What does that mean?

The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit.



For example, if a qualified home buyer expected, notwithstanding the tax credit, federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15th. Suppose now that the taxpayer qualified for the $8,000 home buyer tax credit. As a result, the taxpayer would receive a check for $7,000 ($8,000 minus the $1,000 owed).





I purchased a home in early 2009 and have already filed to receive the $7,500 tax credit on my 2008 tax returns. How can I claim the new $8,000 tax credit instead?

Home buyers in this situation may file an amended 2008 tax return with a 1040X form. You should consult with a tax advisor to ensure you file this return properly.





Instead of buying a new home from a home builder, I hired a contractor to construct a home on a lot that I already own. Do I still qualify for the tax credit?

Yes. For the purposes of the home buyer tax credit, a principal residence that is constructed by the home owner is treated by the tax code as having been "purchased" on the date the owner first occupies the house. In this situation, the date of first occupancy must be on or after January 1, 2009 and before December 1, 2009.



In contrast, for newly-constructed homes bought from a home builder, eligibility for the tax credit is determined by the settlement date.





Can I claim the tax credit if I finance the purchase of my home under a mortgage revenue bond (MRB) program?

Yes. The tax credit can be combined with the MRB home buyer program. Note that first-time home buyers who purchased a home in 2008 may not claim the tax credit if they are participating in an MRB program.





I live in the District of Columbia. Can I claim both the Washington, D.C. first-time home buyer credit and this new credit?

No. You can claim only one.





I am not a U.S. citizen. Can I claim the tax credit?

Maybe. Anyone who is not a nonresident alien (as defined by the IRS), who has not owned a principal residence in the previous three years and who meets the income limits test may claim the tax credit for a qualified home purchase. The IRS provides a definition of "nonresident alien" in IRS Publication 519.





Is a tax credit the same as a tax deduction?

No. A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. That means that a taxpayer who owes $8,000 in income taxes and who receives an $8,000 tax credit would owe nothing to the IRS.



A tax deduction is subtracted from the amount of income that is taxed. Using the same example, assume the taxpayer is in the 15 percent tax bracket and owes $8,000 in income taxes. If the taxpayer receives an $8,000 deduction, the taxpayer’s tax liability would be reduced by $1,200 (15 percent of $8,000), or lowered from $8,000 to $6,800.





I bought a home in 2008. Do I qualify for this credit?

No, but if you purchased your first home between April 9, 2008 and January 1, 2009, you may qualify for a different tax credit. Please consult with your tax advisor for more information.

Is there any way for a home buyer to access the money allocable to the credit sooner than waiting to file their 2009 tax return?

Yes. Prospective home buyers who believe they qualify for the tax credit are permitted to reduce their income tax withholding. Reducing tax withholding (up to the amount of the credit) will enable the buyer to accumulate cash by raising his/her take home pay. This money can then be applied to the downpayment.



Buyers should adjust their withholding amount on their W-4 via their employer or through their quarterly estimated tax payment. IRS Publication 919 contains rules and guidelines for income tax withholding. Prospective home buyers should note that if income tax withholding is reduced and the tax credit qualified purchase does not occur, then the individual would be liable for repayment to the IRS of income tax and possible interest charges and penalties.



In addition, rule changes made as part of the economic stimulus legislation allow home buyers to claim the tax credit and participate in a program financed by tax-exempt bonds. As a result, some state housing finance agencies have introduced programs that provide short-term second mortgage loans that may be used to fund a downpayment. Prospective home buyers should check with their state housing finance agency to see if such a program is available in their community. To date, 14 state agencies have announced tax credit assistance programs, and more are expected to follow suit. The National Council of State Housing Agencies (NCSHA) has compiled a list of such programs, which can be found here.

The Secretary of Housing and Urban Development has announced that HUD will allow "monetization" of the tax credit. What does that mean?

It means that HUD will allow buyers using FHA-insured mortgages to apply their anticipated tax credit toward their home purchase immediately rather than waiting until they file their 2009 income taxes to receive a refund. These funds may be used for certain downpayment and closing cost expenses.



Under the guidelines announced by HUD, non-profits and FHA-approved lenders will be allowed to give home buyers short-term loans of up to $8,000.



The guidelines also allow government agencies, such as state housing finance agencies, to facilitate home sales by providing longer term loans secured by second mortgages.



Housing finance agencies and other government entities may also issue tax credit loans, which home buyers may use to satisfy the FHA 3.5 percent downpayment requirement.



In addition, approved FHA lenders will also be able to purchase a home buyer’s anticipated tax credit to pay closing costs and downpayment costs above the 3.5 percent downpayment that is required for FHA-insured homes.



More information about the guidelines is available on the NAHB web site. Read the HUD mortgagee letter (pdf) and an explanation of the FHA Mortgagee Letter on Tax Credit Monetization (pdf). An FAQ about monetization (pdf) is available at the NAHB web site.

If I’m qualified for the tax credit and buy a home in 2009, can I apply the tax credit against my 2008 tax return?

Yes. The law allows taxpayers to choose ("elect") to treat qualified home purchases in 2009 as if the purchase occurred on December 31, 2008. This means that the 2008 income limit (MAGI) applies and the election accelerates when the credit can be claimed (tax filing for 2008 returns instead of for 2009 returns). A benefit of this election is that a home buyer in 2009 will know their 2008 MAGI with certainty, thereby helping the buyer know whether the income limit will reduce their credit amount.



Taxpayers buying a home who wish to claim it on their 2008 tax return, but who have already submitted their 2008 return to the IRS, may file an amended 2008 return claiming the tax credit. You should consult with a tax professional to determine how to arrange this.

For a home purchase in 2009, can I choose whether to treat the purchase as occurring in 2008 or 2009, depending on in which year my credit amount is the largest?

Yes. If the applicable income phaseout would reduce your home buyer tax credit amount in 2009 and a larger credit would be available using the 2008 MAGI amounts, then you can choose the year that yields the largest credit amount.
Pete Marriott and Bill Garrison Professional Sarasota Realtors ® Prudential Palms Realty . http://www.valuesarasotahomes.com/


Foreclosed / Bank-owned / REO

Sarasota Foreclosed, Bank-Owned or REO real estate can be a wonderful opportunity for many people to pick up a home at a great price BUT you have to be careful and knowledgeable in this ball game. Many Sarasota Foreclosed, Bank-Owned properties have had very little or no maintainece and need extra work and money after closing to bring them up to normal condition (ie) leaking roofs, pest problems, plumbing, A/C repairs. They can be a maintenance nightmare unless properly inspected and even then you should be very cautious.

The Bank Asset Managers, the bankers selling the real estate, are tuff guys and play with their own rules that change often. They try to turn these real estate sales into auctions taking several offers at a time then asking for "final and best offers". Many people think these homes are always sold far below market value. "WRONG". Bank-Owned / REO homes and condos are usually for sale at or close to the true market value. I know of real estate that has had 3 seperate appraisals before the selling price was settled. Some of these homes are very good buys many are not. Be cautious and work with a Professional Realtor.
that's my $000,000.02 bg
Pete Marriott and Bill Garrison Professional Sarasota Realtors ® Prudential Palms Realty . http://www.valuesarasotahomes.com/

Waterfront On Sale

Waterfront homes and condominiums in Sarasota and Manatee County are regarded as the most valuable and desirable property locations. Any waterfront (salt water) real estate with views of the intracoastal waterway or beach front, Gulf of Mexico views, you can quickly increase a homes or condos value 200% -300% or more.

There are great deals right now on waterfront homes and condos (condos being the most affordable) turning the clock back about 7 or 8 years. Right now, Siesta Key, home of Siesta Beach one of best beach on Earth has many great buys available. Longboat key and the rest of the areas "Key properties" are also selling a huge discount off of the 2005 bench mark highs. So what was extremely difficult to purchase for many people most of this decade is now reasonable and worthy of consideration. Think of it as Sarasota and Manatee County are having a 50% Off Sale on all waterfront real estate. So maybe it's time to make a moved and buy yourself a little slice of paradise. While living on Siesta Key or Longboat Key would be wonderful but you should consider that anywhere you live in Sarasota or Manatee County  you are only a few minutes drive to a beautiful county owned beach.      that's my $000,000.02 bg

Pete Marriott and Bill Garrison Professional Sarasota Realtors ® Prudential Palms Realty . http://www.valuesarasotahomes.com/